The effect of noise in a performance measure on work motivation: A real effort laboratory experiment |
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Authors: | Randolph Sloof C Mirjam van Praag |
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Institution: | 1. Department of Economics, University of Melbourne, VIC 3010, Australia.;2. Department of Economics, Monash University, VIC 3800, Australia. |
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Abstract: | This paper reports the results of an individual real effort laboratory experiment where subjects are paid for measured performance. Measured performance equals actual performance plus noise. We compare a stable environment where the noise is small with a volatile environment where the noise is large. Subjects exert significantly more effort in the volatile environment than in the stable environment. This finding is in line with standard agency theory and contrasts the intuitive idea captured by a distinct element of expectancy theory that noisier performance measures would lower work motivation. |
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